Effects of Borrower Characteristics on Loan Repayment

Investigation Overview

In this investigation, I wanted to look at the characteristics of Loan Borrowers that could be used to predict their loan repayment behaviour. The main focus was on:

• Home ownership
• Monthly Income
• Credit Score
• Borrower State
• Employment Status

Dataset Overview

The cleaned data consisted of Loan borrower information of 83,507 loan borrowers, with each entry having 15 attributes. The attributes include the above listed borrower traits of interest among others

Distribution of Stated Monthly Income

Stated Monthly Income refers to the amount that a borrower indicated as the amount they receive as monthly payment from their occupation or employment opportunity.

Observation:

Most of the records are concentrated around between 2000 and 6000, which makes the distribution of the stated monthly incomes right tailed.

Distribution of Borrowers in every state

Observation:

From a user's perspective, it is evident that California has the highest population of borrowers. In this visualization, the user can clearly see the location of every State, which makes the data even more engaging.

Number of Borrowers grouped by Occupation

Observation:

In the population of Borrowers, the number of individuals who listed their occupation as other was disproportionately high.

>> Further research should be conducted to check whether selecting other as an occupation was an escape strategy of avoiding to indicate that they were unemployed.

Loan Borrowers grouped by Home Ownership

Observation

A slightly higher number of borrowers owned houses. Precisely, in the cleaned data, 40,671 borrowers owned homes while 36,098 borrowers were not home owners.

Stated Monthly Salary Versus Montly Loan Payment

Comment:

The scatter plot above indicates a positive relationship between the stated monthly income and credit score midrange. This implies that borrowers with a higher stated monthly income tend to have a higher credit score mid_range

Credit Score Mid_range versus Monthly Loan Payment

Comment:

There exist a positive correlation between monthly loan payment and credit score. This means that borrowers with a higher credit score tend have a higher monthly loan payment amount.

Monthly Loan Payment by Employment Status

Comment:

The Monthly Loan Payment of Employed borrowers varies more as compared to the monthly loan payment of individuals who had other employment status.

Borrowers who were not employed had a monthly loan payment which was almost zore on average.